Mortgage Broker Fees: Lender-Paid and Borrower-Paid Compensation

Lender-paid broker compensation

Under a lender-paid structure, the wholesale lender pays the mortgage broker according to the applicable compensation agreement. The compensation is reflected in the lender's pricing available through that channel. It should not be described as free simply because it is not shown as a separate borrower-paid charge.

Kellibrooke's standard structure is lender-paid. Borrower-paid Section A is generally empty unless the borrower voluntarily selects discount points for a below-par rate or a rare file-specific lender or originator charge applies. Kellibrooke does not add a processing fee. The actual Loan Estimate controls each transaction.

Borrower-paid broker compensation

Under a borrower-paid structure, broker compensation is charged to the borrower and disclosed as an origination charge. This can change the rate and credit combinations available from the lender. It is not automatically better or worse than lender-paid compensation.

The useful question is the complete economic result: rate, points, broker or lender charges, lender credits, APR, payment, cash to close, and expected cost over the period the borrower expects to keep the loan.

Why one fee line is not enough

A quote with no obvious origination fee can carry a higher rate. A quote with points can carry a lower rate. A borrower-paid compensation structure can change available wholesale pricing. A lender credit can offset costs while increasing the rate. Comparing only the fee label can hide these tradeoffs.

The lender-fee guide maps Loan Estimate Sections A through C. The offer comparison worksheet compares loan amount, rate, Section A charges, and lender credits.

Questions to ask a mortgage broker

• Is this quote lender-paid or borrower-paid?
• What appears in Loan Estimate Section A?
• Are discount points included, and what rate is available without points?
• Is there a lender credit, and how does it change the rate?
• Does the broker add a processing, administration, underwriting, or application fee?
• Are the compared offers using the same loan amount, term, lock period, and property assumptions?
• What are the APR, estimated cash to close, and five-year cost?

How Kellibrooke's fee position should be read

Kellibrooke does not add a processing fee. That statement is narrow. It does not mean the transaction has no appraisal, credit, title, settlement, recording, insurance, tax, prepaid, escrow, or other applicable costs. It also does not mean lender-paid broker compensation has no effect on pricing.

Use the actual Loan Estimate for a transaction. Compare Section A charges, rate, APR, lender credits, and the five-year cost against another offer using matched assumptions. The Texas closing-cost hub shows where every category fits.